Cabbies up in arms as Sarkozy cuts red tape

French hairdressers, taxi drivers and supermarket owners could soon be freed from the grip of state regulation after Nicolas Sarkozy was yesterday presented with a miracle plan that could drag the ailing French economy out of years of stupor.

The controversial free-market proposals by a commission of economists and business leaders seek to boost France's sluggish growth by scrapping bureaucracy, freeing supermarket giants to set their own prices and easing entry to state-regulated professions. But they have already caused ructions within the president's ruling centre-right party. Local elections loom in March and some politicians fear the reaction of voters accustomed to high French state intervention and suspicious of liberalisation and open competition.

Sarkozy yesterday embraced a proposal to scrap ancient state regulations on entry to jobs such as taxi driving, hairdressing and working as a solicitor. He acknowledged the outdated rules governing French taxis, which have spawned a Parisian joke that it is impossible to find a taxi in rush hour or in the rain. "Paris is the only town in the world where you have a problem finding a taxi," Sarkozy said.

French taxi drivers are so heavily regulated that new entrants must take over the licence of a retiring driver at great cost, or wait years to get their own. This means there is little competition and a lack of cabs. The number of Paris taxis in 2007 was only fractionally more than in 1937.

But the national federation of self-employed taxi drivers said it was "outraged" by the proposal, adding that members would take to the streets.

Hairdressers also complained about ending state regulation. France has stricter entry requirements for hairdressing than its EU neighbours, insisting on two diplomas and an average of four years' specialised training plus an apprenticeship - demands which put off newcomers and protect existing businesses from competition, say critics.

But the president refused to loosen rules on pharmacists and remove limits on where chemists could set up shop.

Sarkozy will meet the government to discuss the 316-point plan, but he immediately ruled out some of the most radical proposals such as scrapping the system of administrative departments, which date back to the 1789 revolution. He made no comment on the suggestion that France should ease immigration rules to stem labour shortages - which would run contrary to his plans for immigrant quotas.

France's economic malaise is voters' biggest concern and Sarkozy's biggest headache. His promised "economic revolution" has yet to materialise. His early policies of tax breaks and flexible working hours have yet to be felt and his popularity has plummeted as voters complain of low salaries and the rising cost of living.

Jacques Attali, François Mitterrand's former economics guru, who headed yesterday's report, warned that the president must "risk being unpopular for a time" to overhaul the economy. But the plan's success will depend on Sarkozy's ability to sell the idea of liberalisation to the public.

This month he appointed two Nobel prize-winning economists to review the way French economic growth was measured. GDP figures now take into account quality of life.